MARIMBA, INC. & GTC BIOTHERAPEUTICS, INC.

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Hello Readers,

A REMINDER: Our new Web site design should be in place any day. To access future issues of the Newsletter, go the top of the new Home Page and click “Pennystocks Newsletter”.

The bad news is that the markets have just been running in place over the last few weeks, as have most of the stocks in our Current Portfolio; you will notice we haven’t closed any positions since the last Newsletter. Then again, these seem to come in bunches. Now, the good news is that the markets have not tanked, which is a pretty typical occurrence during August. Not even a power blackout affecting 50 million people made the markets swoon. So, barring any global or domestic terrorist catastrophe, our outlook is still that of a raging bull.

Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.

New York Health Care (BBAL) (3/20/97). Clinical trial shows novel agent highly effective for treating diarrhea in AIDS patients. Over the last month, it now appears there may be a glimmer of hope for the “moldie oldie”.

Draxis Health (DRAX) (3/20/00). Initiates Phase 2 clinical trials of infection agent. 2nd QT shows earnings and fourth straight quarter of revenue growth; however, balance sheet could be better.

MCF Corp. (MEM) (1/20/01). Quarterly numbers not bad, helped by one-time windfall.

Hauppauge Digital (HAUP) (2/5/01). Quarterly report shows good growth over last nine months.

Digital Power (DPW) (2/20/01). Awarded $1.6 million contract for a military avionics application. Quarterly numbers and balance sheet not great, but company still appears viable.

InSite Vision (ISV) (4/20/01).. Quarterly numbers sort of stink. Remember, this is on the “Endangered List”.

Arotech (ARTX) (6/5/01). Arotech’s electric fuel zinc air bus sets a world record 145 miles. New security division to market Rafael homeland security products in U.S. Issues quarterly report.

ViroLogic (VLGC) (7/20/01). Justice officials/SEC end guidance probe. Gets over $3 million awarded in NIH grants. Quarterly report shows continued revenue growth and decent-looking balance sheet.

Abraxas Petroleum (ABP) (10/5/01). Quarterly numbers not great. Registration statement effective.

Access Pharmaceuticals (AKC) (11/5/01). Quarterly report gives product updates and shows okay cash/working capital.

Orthovita (VITA) (12/20/01). Balance sheet still appears real healthy.

Superconductor Technologies (SCON) (1/5/02). Quarterly numbers so-so, but balance sheet looks good.

Epoch BioSciences (EBIO) (1/20/02). Quarterly report still shows seemingly good balance sheet.

Mechanical Technology (MKTY) (3/5/02). Second quarter reflects continued growth and pretty good-looking balance sheet.

Catalyst (CLYS) (3/20/02). Wins ALDO Shoes supply chain execution project. Quarterly results not great. This one is on the “Endangered List”.

Magic Software (MGIC) (3/20/02). Company swings to 2nd QT profits.

Argonaut (AGNT) (4/20/02). Introduces new tool to increase throughput of drug candidate evaluation.

Diomed (DIO) (7/5/02). New study shows excellent results for treatment of varicose veins with Endovenous laser.

Hemispherx (HEB) (7/5/02). Enters into accord with the Johann Wolfganag Geothe University’s Institute of Virology. Receives new patents for oral dosed broad-spectrum immune activators.

Rigel Pharma (RGL) (7/20/02). 2nd QT balance sheet looks pretty good, but, remember, this, too, is on the “Endangered List” due to that reverse stock split, which we feel was just plain stupid.

Generex (GNBT) (8/5/02). Announces $224,000 Phase 1 NIH SBIR award for preclincial development of a breast cancer vaccine. Completes purchase of Antigen Express.

Viewpoint (VWPT) (11/20/02). Also on the “Endangered List”, appoints new top management. Here’s hoping….

Titan Pharma (TTP) (11/20/02). Announces favorable results from Pivanex study. 2nd QT balance sheet still looks very healthy.

Jacada (JCDA) (6/20/03). Indiana Farm Bureau breathes new life into Legacy Insurance System with Jacada.

Allos Therapeutics (ALTH) (6/20/03). RSR13 in non-small cell lung cancer shows longer median survival. Submits NDA for radiation sensitizer. Balance sheet for 2nd QT seems healthy.

Caliber (CALP) (7/5/03). Reduces work force. Second quarter results about as expected; balance sheet still looks remarkably good.

NIC, Inc. (EGOV) (8/5/03). News releases dealing with Montana, Tennessee, and Utah. Reports record 2nd QT earnings.

Our picks for this issue are another small tech and another biotech. What else?

MARIMBA, INC. (NASDAQ: MRBA) – $3.66. Twelve-month hi-low has been $3.74 – $1.10. Headquartered in Mountain View, CA, with about 175 employees, this software company has 25.6 million shares outstanding, $50.47 million in total current assets, $63.9 million in total assets, little debt, and $14.32 million in total liabilities. Institutional ownership is about 10%. http://marimba.com

Software companies have been slowly crawling out of the abyss over the last several months, so, why not pick one whose stock hit $60 during the Net craze of early 2000. Particularly if that company has a good product line and good-looking balance sheet, like Marimba, Inc.

Founded in 1996, Marimba bills itself as a software change-management company. It claims to be the only software vendor with end-to-end change and configuration management solutions for desktops, laptops, servers, and devices. MRBA’s products allow customers to reduce their total cost of ownership and improve quality of service by streamlining the distribution and management of applications and content. Aimed at large computing environments, Marimba helps reduce administration and support costs as much as 50% to 75%, lower asset and licensing costs, and minimizes frequent software updates and end-users.

Marimba’s three main product groupings are the Desktop/Mobil Product Family, the Server Change Management Product Family, and the Embedded Management Product Family. With more than 25 million end-points deployed worldwide, Marimba customers usually see a return on investment within six to twelve months. Its hundreds of customers include such notables as Bear Stearns, Duke Energy, MetLife, NASA, NASDAQ, Pfizer, P&G, Verizon, Kinko’s, Medtronic, and WellPoint Blue Shield.

Last month, Marimba announced that Mourant, an U.K. provider of professional services, and Ultimate Electronics had selected its solutions. In June, the company received its fifth patent for its software change management solutions.

For FY2002, ending 12/31/02, revenues were $35.2 million with $11.46 million in losses versus 2001 revenues of $44 million and $11.49 million in losses. For the last three quarters, including the 4thQT of 2002, Marimba has shown net income. During the first six months of the current FY, ending 6/30/03, revenue was $20.36 million with $1.04 million in net income.

This appears to be a case of “what’s there not to like?” The company seems to have a good balance sheet, may be turning the corner on the P & L, and has a huge customer base.

Our 24-month target for the stock is $6.50 to $7.00.

For more information, call MRBA’s Andrew Chmyz at 650-930-5282; InvestorRelations@marimba.com

GTC BIOTHERAPEUTICS, INC. (NASDAQ: GTCB) – $2.40. Twelve-month hi-low has been $4.34 – 73 cents. Based in Framingham, MA, with about 180 employees, this biotech has 28.2 million shares outstanding, $38 million in cash/equivalents, $80.16 million in total assets, $13.23 million in long-term debt, and $11.09 million in current liabilities. One analyst rates the stock a “hold”. Genzyme Corp. owns 18% of the common stock and institutional ownership is around 11%. http://www.gtc-bio.com

Yes, we again add another biotech to the Current Portfolio, and here’s one with some very unique technologies and an okay balance sheet. GTC Biotherapeutics, Inc. has been around for quite some time and has had its share of ups and downs; stock hit a high of $44 in February, 2000 – what stock didn’t? Time for another “up”?

Trading on NASDAQ for over ten years, GTC bills itself as a leader in the development of therapeutic proteins in the milk of transgenic animals, which carry specific genetic material that allows them to express human therapeutics proteins. Once they are produced, these recombinant proteins can be efficiently purified from milk for use as therapeutics. To date, unique molecular biology expertise has enabled the company to express more than 60 therapeutic proteins, including monoclonal antibodies, plasma proteins, and certain hard-to-express proteins in the milk of mice, rabbits, goats, and cows. These antibodies and proteins being developed by GTC may be potential treatments for a wide variety of illnesses, such as autoimmune disorders and cancer.

GTC currently has twelve products in various developmental stages for treating such illnesses and disorders as Crohn’s disease, rheumatoid arthritis, neurological disorders, organ transplant rejections, autoimmune disorders, nephritis, HIV/AIDS, small-cell lung cancer, MS, and myasthenia gravis. Partners in these projects include Centocor, Abbott Labs, Elan, BristolMyersSquibb, Alexion, Progenics, ImmunoGen, and Merrimack. And, don’t forget about the large chunk of the company that’s owned by Genzyme.

At the end of July, GTC announced a private placement of between $9 million and $10 million, but this could be a drag on the stock for a while. In April, a preclinical study showed that one of GTC’s products may have promise as an effective treatment for acute lung injury following smoke inhalation and pneumonia. Earlier this Spring, the NIAID announced it would fund the company’s development of clinical production for a malaria vaccine.

GTC’s numbers are pretty typical of a biotech with losses severely outweighing revenues. For FY2002, ending 12/29/03, revenues were $10.37 million with $24.32 million in losses. During the first six months of this FY, ending 6/29/03, revenue was $5.85 million with $13.4 million in losses. However, the company expects year-end revenue to total $15 million to $20 million with losses of 70-80 cents a share.

GTC has a lot in the pipeline and big names behind it. The stock seems to be in a lull right now, but any good news could again break it nicely to the upside.

Our 20-month target for the stock is $4.25 to $5.00.

For more information, call GTCB’s IR people at 508-370-5374.

Look for the September 5, 2003 issue to be posted on 9/2 or 9/3.

Thank you,
George